Luke Johnson/The New York Times/Redux

How the Gig Economy Promotes Inequality

by juliet schor

juliet schor is professor of sociology at Boston College and author of After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back.

Published September 18, 2020


In the early days of the Covid-19 lockdown, communities adopted a “we’re all in this together” ethos that made many Americans feel better (at least comparatively better) about their shared sacrifices. Overworked doctors and nurses were appreciated by just about everybody as “frontline workers” in the pandemic response. But the goodwill didn’t spread far. At-risk essential shopping, driving and delivery “gig workers” were less recognized as the population self-isolated. Moreover, gig work is increasingly done by immigrants and people of color.

Then a racial reckoning swept in a new consciousness about inequality, and the jig was up on the gig economy. For while the trials of gig work are, of course, not the same as being at risk of police violence, low-paid app work has its own kind of violence, whether it’s via extra exposure to the virus, dangerous working conditions, bellicose customers or poverty wages. It’s time to inject some anti-racist policies into an overdue upgrading of this work.

Techno-Utopian Dreams

When the app-based gig economy debuted in 2008-2009, it was wrapped in idealist discourse. Companies promised a new way to work (i.e., without a boss) and with control over hours and schedules. They would open up opportunity to groups, such as Black and Latinx people, who face structural racism in the “legacy” economy. As one of the first researchers to study these workers, I found many that bought into this ethos across ethno-racial groups.;

Those my students and I spoke with were making good wages, considerably above what was available in other low-skill jobs, and loved the freedom afforded by platform work. In those recessionary years, many of the people we studied were recent graduates without full-time jobs or highly educated people, including students. Interviewing across a range of platforms, we found that most, and especially those working part-time, were happy with the gigs.

Scholars also had high hopes for these new digitally driven companies. Some economists, among them Arun Sundararajan from NYU’s Stern School of Business, predicted that platforms would disproportionately help low-income households, which are disproportionately Black and Latinx, by allowing them to monetize their “assets” and labor. Standard analysis reasoned that the availability of this technology would turbocharge small-scale enterprises and micro-entrepreneurs. Studies of the public ratings and reputation systems used by almost all of these apps suggested that offering concrete information about providers would dramatically reduce racial discrimination, as users would gravitate to highly ranked workers whatever their skin color. 

But things haven’t worked out as proponents expected. As our interviewing continued over the years, including with a few respondents we had spoken to in the early days, we heard more negative stories. On some platforms, policy changes led earners to quit, explaining that the platform no longer “has our back.” Earnings began to fall in the biggest markets, most famously in ride-hail. As Uber and Lyft squeezed drivers, stories of extreme deprivation and exploitation began to emerge. 

Drivers were sleeping in their cars, going into debt to finance vehicles, and once expenses were properly accounted for, earning at or below minimum wage. A new study for the city of Seattle found a $9.73 average after costs, well below the city’s $15 guarantee. One reason is that the companies have been taking steadily higher fractions of the fares — one estimate for Lyft found an increase from 18 percent in 2016 to 30 percent in 2019. 

Wages were also being cut on delivery and shopping apps, two fast-growing sectors. Earnings weren’t adding up even on some of the better-paying platforms. As one of our TaskRabbit earners explained, “It’s just a fantastic way to always stay at the poverty level.”

Because of the racial skew among customers, who are disproportionately white, and workers, who are disproportionately non-white, the servant economy carves out new forms of racial inequality.

As conditions worsened, the composition of earners became less white and U.S. born. A recent study of ride-hail and delivery workers in San Francisco found that 56 percent are immigrants, and only 22 percent are white. Studies of ride-hail drivers in other major cities report similar findings.

But it wasn’t only wage cuts that were plaguing gig workers. Jobs have also become harder to get, as platforms over-hired, relative to demand. Before the Covid-19 lockdown, idle time for many gig workers was already significant, as the companies find it expedient to have excess capacity to provide for unanticipated rushes. One study using Uber’s own data found that, in Seattle, 35 percent of drivers’ time on the app was spent waiting for a fare.

This problem has intensified as the pandemic has disrupted demand patterns. Ride-hail has collapsed. Delivery and shopping have surged, but aggressive recruiting by the companies, as well as seamless transitions from other gig jobs (e.g., from UberX to food delivery on UberEats), has swollen the ranks of gig workers. The San Francisco study cited above found that 41 percent of current delivery workers have shifted from ride-hail. In research on shoppers and delivery drivers I am conducting with colleagues at Northeastern University in Boston for a project on “the algorithmic workplace,” our respondents are reporting sharp declines in the availability of work. On Instacart, savvy workers are using bots to claim shifts, and an inability to get work has become a major problem.

Worker exploitation has been exposed but racial inequity much less so. While academic predictions suggested the apps would be free of discrimination, independent audits and other studies found ongoing inequities. On lodging, ride-hail and errand platforms, researchers found that experiences for earners differed by race. Non-whites earned less money as Airbnb hosts and guests got lower ratings on that platform and others. A Chicago study of errand app TaskRabbit found that “taskers” were scarce from the city’s poorest and Blackest neighborhoods. And for non-users, the platforms created racially skewed dynamics, such as racial gentrification, in which residents of color are pushed out of neighborhoods as they become Airbnb hubs.

The gig economy is also reproducing interpersonal inequality structured by race and class—think of it as a servant economy. The apps allow the privileged to get personalized services they can afford by the task. A bicycle courier talked about the indignity of being asked to deliver food through a “poor door” — a.k.a. a servants’ entrance. Drivers recounted being subject to the prejudices of passengers, who have the power to rate them poorly. One interviewee, who had experienced both sides of these exchanges — as earner and customer — explained how the latter role led her into a de-humanizing attitude toward the service provider, even as she tried to remember what it was like on the other side of the app.

One errand runner refused to get lattes for customers, because that’s just too “lazy.” But she has a full-time job and can afford to turn down tasks she thinks people should do themselves. Most delivery and errand earners these days don’t have that luxury. Because of the racial skew among customers, who are disproportionately white, and workers, who are disproportionately non-white, the servant economy carves out new forms of racial inequality.

When Markets Fail

Starting in 2018, momentum for regulating app work began to build. The companies have paid lip service to reform but haven’t solved the problems. Airbnb periodically purged illegal listings but allowed them to repopulate their site. Uber and Lyft talked a good game about the need for benefits and wage guarantees, but took no substantive action. As a result, governments began to act.

Airbnb regulations tightened. New York City instituted a minimum wage for ride-hail and taxi drivers. In April of 2020, Seattle instituted a 15 percent cap on food delivery costs to help restaurants and is considering a minimum wage for ride-hail drivers. Uber and Lyft are currently being sued by Attorneys General in California and Massachusetts for misclassifying drivers as independent contractors rather than the employees they should be by state law.

Not a Done Deal

Uber and Lyft aren’t about to give in. They took their brinksmanship to the limit in August, threatening to shut down in California in defiance of AB5, the California law mandating that their workers are employees. The ride services are hoping a voter referendum, where their $200 million can make a big difference, will undo the law in November.

There are also various barriers to municipal action, including preemption laws the platforms have gotten passed at the state level that prevent municipalities from setting tougher standards. And it’s unclear if the momentum for worker protection will withstand the recession we have fallen into. But if the country is serious about addressing structural racism, gig work is one of the practices that needs to be addressed — and soon.

main topic: Inequality
related topics: Business